Back at E3 when we met with EA chief executive John Riccitiello, he told us that he expected software sales (as measured by NPD) to see growth in the low to mid single digits this year. Since then, however, the game industry has continued to struggle, posting four consecutive months of decline so far. Riccitiello has therefore changed his tune when it comes to software sales growth.
On the EA conference call following the publisher's Q1 results, Riccitiello commented on his outlook for the industry and retail environment: "This year through June packaged goods software sales were down 12% in North America, and we estimate minus 10% in Europe. Even though we expect tough compares in the June quarter, software sales were softer than expected, due in part to fewer hardware sales. In addition, we saw significant declines in the music category, which was down 52% with Rock Band having a particularly tough compare. As a result, for the calendar year we now expect packaged goods software sales to be flat year-over-year in North America and Europe combined."
Nevertheless, he still expects packaged goods software to grow in the back-half of the year, "fueled by great titles, hardware catalysts, and easier compares." He also pointed to the fact that the industry overall, when you factor in digital sales and services, is still growing. Even so, Riccitiello admitted that "the industry is weaker than we originally expected and we remain cautious on the macroenvironment and its impact on consumers."
He also noted that recent delays for some big holiday titles have made the usually crazy calendar Q4 "less competitive," which he feels is a "good opportunity" for EA. Riccitiello added that EA plans to allocate additional marketing dollars for certain titles to better position them, and EA is "making cost cuts in other parts of the business to fund these initiatives."
1 Comments
August 5, 2009
Yea, good luck with that EA! 3-4 months ago almost everybody in the industry was taking about how the video game industry was "recession proof", and they all foresaw growth in 2009. By June most analysts and developers foresaw marginal growth in 2009 sales. Now most analysts and developers say that software sales will most likely be flat in 2009. Wait a couple of months and you will see: Even the latest projections are most likely going to be changed, as sales are going to be affected by lower-than-expected performances of software and hardware sales. People are hurt by the bad economy and are just not willing to spend money as generous as they used to. Yes, some family titles will hit high numbers and certain AAA titles will sell countless units. However, the game industry as a whole, just like every other industry that is based on consumer spending these days, is going to suffer from the bad economy. Lets just hope that this is going to be a temporary situation, and that the industry will come back stronger!